Netwealth investment wrap

Hi all,

Have recently obtained an SoA from a licensed fin planner, and he's recommending several funds managed via a Netwealth Investment Wrap to fit a growth/high growth profile with a 7+ yr timeframe and monthly contributions.

However, Netwealth has a contribution fee of up to 4.1%, tiered admin fee of up to .825% p/a and adviser service fee of 2.05% p/a.

Do these fees seem high or even excessive (little info around on wraps)?
Will they be levied on top of annual MER for each fund as well?
What (the hell) is a contribution fee anyway?
Does anyone use Netwealth, and could provide recommendations for/against?

I don't have any experience at all with wrap products so in I'm a little in the dark here - would appreciate any advice or tips. I understand they condense everything into one package to make tax/dividend tracking easier but thats about it.

Finplanner is fee based so it doesn't seem that he'll be making trail commission on these products (based on the info so far). Not that I don't trust his advice, but like to seek other opinions...for my own learning more than anything.

For info, the funds are:

Vanguard Aus Shares Index - 30%
Ausbil Aus Active Equities - 15%
Ausbil Aus Emerging Leaders - 15%
Vanguard Int Shares Index - 20%
Platinum Int Fund - 10%
Templeton Global Share Fund - 10%

They would account for 50% of current surplus funds (other 50% to be held in high interest cash).

Would very much welcome any thoughts on these (or other more suitable) funds too.

Thanks in advance,

Flip

 

Hmm, I kinda had that feeling about the contribution fees. I haven't even gone as far as the PDS, but was quoting the numbers directly from the Statement of Advice recieved from him. Its probably a PDS related question, but is it common for contribution fees to be paid at startup and then for every additional investment in the wrap (ie monthly contributions)?

Thanks for your advice though. On another point, the quality of the SoA is quite poor (I can tell that large chunks have been cut and pasted, even leaving another clients name in one place!) so I'm now very wary.

The face to face meetings I've had with him were quite positive though.

If he can't get my name, salary (it changes in 3 places) and phone number correct, then what else might he get wrong???

 

Hi Flip,

The Statement of Advice should specifically be detailing the fees that you are paying and not generalising contribution fees of "UP TO". ASIC also require that these fees are quoted in dollar figures as well. This is the same for any Adviser Service Fees.

It is embarrassing if your adviser had another client's name in your SoA. Who knows what else he might get wrong (certainly lack of attention to detail).

Good luck with your next steps.

Cheers,

Dan

 

Rip-Off

Hi Flip,
Matey, you are being ripped off. Most of the Funds you mentioned can be accessed directly without incurring expense.
The STORM Financial debacle illustrated how easy it is for Financial Planners to bundle Index funds as their own and charge outlandish fees.
Don't do it.

Dave

 

Walk backwards from the Gold Coast to Brisbane if that allocation (say 50/50 bonds+cash/shares with a 60/40 domestic international split If I read it correct) outperforms any self managed passive portfolio (goog 'lazy portfolio') over any meaningful period of time. As well as lazy portfolios a look at the Bogle Head forums would be a good start as well.

The kicker is the fee structure you have to overcome when you chase alpha, once you appreciate what a massive drag fees are and what a precious thing alpha is things become clearer. I take it the Vanguard funds are index products? If so is it just me that sees the delicious irony in charging chunky fees for participation in these products?

Not advice from me! You get what you pay for! Past performance is no indication of future performance! (No written guarantee of walking backwards can be implied from this text)

See ya

 

In case that was a bit cryptic here is a pretty good resource about lazy portfolios.

The Kirk Report - One Pro's View Of The Stock Market

Also Bogle's books are a must read imo for any managed fund investors, I'm not a fan of chasing alpha via managed funds so my view is biased. Or if you are going to chase alpha (which might imply you need to fork up for something other than bare bones fees) then it should be a smallish % of your porfolio.

 

Hi all,

Thanks very much for the advice. I had thought that the SoA was pretty poor quality and will be going back to the financial guy with that response.

Insight, I'm not altogether sure what 'alpha' means but I do recognise that the portfolio would have to do something fairly spectacular to overcome the near 7% fee structure and make a decent return.

At this point, I don't really want to have anything more to do with this guy - I am prepared to pay him for his time (some $400) with regard to the face to face meetings (there were 2) but nothing more.

He is seeking some $2200 total for the SoA and 'implementation' which to me seems ridiculous, particularly in light of the quality of the document I've recieved. Given that the SoA is ambigious (possibly even against ASIC guidlelines) I don't feel that this is an unreasonable approach to walk away.

What do you think?

 

Hi flipper, i have a netwealth wrap account and the fees you have quoted are the "maximum" an adviser may charge you however most do not charge the full amount.

The fees are in addition the admin charge and can be negiated with your planner. on average most financial planners seem to charge around 2.2% upfront and 1% ongoing for the advice.

I suggest you clarify what your adviser is going to charge you so you are comfortable.

 

I would be simply steering clear of this SoA. Sorry to hear of your offer. Seems quite unprofessional, and like you mentioned 7% just to come back to water level.. Hardly seems worth it.

 

Thanks all very much for the advice - although the final issues (surrounding the invoice amount) are still yet to be finalised (I think anyway - haven't heard a peep yet).

After some VERY condescending email replies from fin planner about being a 'low value' client etc when I called him on the errors I feel much better about staying well clear!

Could still be a FOS referral, but we'll see what their accounts dept has to say first.

Now developing a whole new plan for 2010 - thanks again invested forum dwellers!

 

seems quite high I would look elsewhere mate

 

Simon, I am the Joint MD of Netwealth and would be grateful if you could refer your members directly to Netwealth if they have any concerns. They can contact us on 1800 888223 or [email protected] or me if they have concerns at all about the advice they are receiving or the fees they are being charged. thank you.

 

One of my pet hates is funds that are so far behind the times you have to apply via paper, trek to a JP for identity approval, mail or fax the application, then be unable to track your investment and so on.

Even old-fashioned Vanguard looks user-friendly next to them.

Unless you can access a wrap platform. Alas, 95% of them are adviser only. In which case you pay fees like the above and more.

To their credit, Netwealth is the only wrap platform that lets individual investors sign up and access the same funds as advisors.

BT has a retail platform but just a few crappy funds.

However, the Netwealth user experience is very annoying. The site navigation is awful and the sign-up process obtuse in spite the best attempts of their help people.

It then took weeks for them to actually set up my account.

Worse than all that though, is the lack of transparency about fees.

I understand they need to charge a fee, as that is how they make money. But finding what that fee actually is requires a deep dive into various different PDS's.

As it turns out, their fees are high enough that it didn't make sense to access the fund I wanted (a bond fund) through them.

But depending on what you are after they could be worthwhile.